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China's seven-day rate jumped to record 12% after Beijing refused new funds

China central bank aims to slow expanding debt, easy access to credit

Shanghai Composite Index has slid 10% since the start of June

China delivered a one-two punch of negative economic data this week, hitting first with an initial report on factory activity falling to a surprise nine-month low and then with interbank lending rates rocketing to a record high.

The gloomy numbers keep fears alive that the world's second-largest economic engine is not just slowing down -- but also seizing up.

China's main seven-day repurchase rate jumped to a record 12% this Thursday, according to CME Group. China's weighted average overnight repo rate hit 13.1% -- the highest in more than a decade.

However on Friday, repurchase rates fell on reports that China's central bank had supplied more than $8 billion in new liquidity to ease the current cash crunch.

On June 20, the same day that China's repurchase rates hit record highs, HSBC's June "flash" purchasing managers' index fell to a nine month low of 48.3. A PMI reading below 50 indicates contraction in the country's manufacturing sector as new export orders plunged from major trading partners like the United States and Europe.